Earlier this year, I violated Yet Another Rule of Venture Capital. Don’t invest in services businesses, They Say — and that includes SaaS businesses that born out of services business. Yes, Hootsuite and others have made this transition work well in the end, growing out of agencies and the like. But generally, they say, founders that come out of services businesses are (x) too underinvested on the tech side, (y) too conservative, (z) too slow to step on the accelerator, and (aa) too stuck in a services mindset to ever build a SaaS Unicorn.
1. Don’t copy others, unless the leader has already established “this is how it’s done” pricing, but even then do you your own research, because…2. Align your price with the value received from your customer and make it as predictable as possible upfront. This is much easier said than done, but if you can align your pricing with value, you may just have a scalable and disruptive SaaS business that will kill your former self, the services business AND all the competition.
(Cross-posted @ SaaStr)